This just in from Medical Bankruptcy Tips.com. This is news article from Salt Lake City where an attorney is noticing a nasty trend in bankruptcy filings. I'm sure many people can relate to this. Do you or did you have a nest egg built up with a 401K, a good job, enough money each month to live comfortably? People, if you think the economy is getting better, you are being lied to. People are losing their jobs and are being forced to live off of their 401Ks and Credit Cards because their resources have been used up and their are no jobs.

Local attorney sees increase in bankruptcies for unlikely people

August 26th, 2010 @ 5:20am

By Cleon Wall

SALT LAKE CITY — When you hear that someone has filed for bankruptcy, you may think they are younger and just got in over their head or maybe got hit with an undue hardship like medical bills. Bankruptcy attorney Stephen Enderton says those clients are still out there, but others you may not expect are also using his services.

"What we're getting is those who had that nest egg, who had that buildup, and they would never have had a problem had the economy not stopped," he said.

Enderton, who is also the state co-chair for the National Association of Consumer Bankruptcy Attorneys, says some people have been living off their savings — some for over a year.

"The sad thing is, in a bankruptcy a 401K and an IRA [are] exempt, and the people that are coming in now are using them to live on just to get past that," Enderton said. "And so there are people who are doing everything in their power, including using exempt assets to try and avoid this situation."

Many of Enderton's clients lost jobs, had small businesses or now have new jobs that pay a lot less than the old one.

"So even though they have a job, it's certainly not enough to support the lifestyle that they had," he said.

Enderton says it's tough for these hard workers to come in to his office. "They're shell shocked, they are broken hearted," he said.

But Enderton says it's his job to show them that bankruptcy may be the best thing for them.

"I want them to understand the system, I want them to understand where they're at and I want them to understand that this is not the end of the world," he said.

In regards to Medical Bankruptcy, The question has been asked – “At what point do you actually file for bankruptcy instead of just thinking about it?”. The answer to this question is explained somewhat in this article and is basically – “When your mounting debt gets to a low point where you can see you are running out of resources”. When your mounting debt has a root cause of a medical condition, there is often no other way out.

Large percentages of Americans who have filed bankruptcy in recent years have cited medical bills as one of their reasons for doing so, although statistics from the US Department of Justice shows that only about 13% percent of the debt discharged in bankruptcy is specifically medical. But if you are a family or an individual who has had to miss a credit card payment because you have no health insurance and your last sinus infection set you back about $275 between the doctor visit and the prescriptions – then you can easily understand how medical bills can quickly impact your overall finances and perhaps start the slide into bankruptcy.

Often bankruptcy is the low point in a downward spiral that can be traced back to job loss, prolonged unemployment, and unexpected emergencies that leave astronomical bills in their wake.

Medical bankruptcy happens to individuals and it happens to hospitals too. The situation that this rarely visited rural California county is the same as individuals go through when trying to get out of debt. The cycle goes like this: Bills add up and you try to pay all of them by borrowing from other funds (in the case of individuals, it would be credit cards and home equity) – then when you get so far over your head by paying your bills the wrong way, you have to then get loans to pay off loans and they cycle continues. Check out this article and see if it is similar to what you are going through right now….

The county's predicament became widely public last month with the loan requests. The largest, $12.5 million, would enable the county to repay money it has improperly borrowed from other county accounts to keep its hospital afloat. The money was meant for other purposes — such as roads and education projects, and borrowing it was a violation of state law, according to the state controller's office.

Medical bankruptcy is on the rise in the US. This is generally because of rising costs of health care, households on the brink of financial collapse when an emergency comes along, and using home equity to pay for the medical bills. Bankruptcy, in general is on the rise. Some data indicates that medical inflation is going down for the first time in 35 years.

Nobody should expect this trend to continue. If it did, we would solve our debt crisis at the expense of blowing up our unemployment rate by killing one of the only working job engines in the country, our health sector.

It's troubling to think that medical inflation is both the engine of our health care industry — our top sector in the next decade — and the engine of our debt accumulation in the next few decades, which is presumably something we'd like to slow. When I think about how health care spending is central to job creation in hundreds of cities across the country, and also how curbing the growth of health care spending is central to our financial stability, my head sort of wants to explode.